8-K
Vulcan Materials CO (VMC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION****Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 16, 2021
VULCAN MATERIALS COMPANY
(Exact name of registrant as specified in its charter)
| New Jersey | 001-33841 | 20-8579133 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1200Urban Center Drive****Birmingham ,Alabama
35242
(Address of principal executive offices) (zip code)
(205
)
298-3000
Registrant's telephone number, including area code
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which<br><br>registered |
|---|---|---|
| Common Stock, $1 par value | VMC | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On February 16, 2021, Vulcan Materials Company announced its financial results for the fourth quarter ended December 31, 2020. The press release announcing the results is furnished as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
|---|
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release, dated February 16, 2021 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| VULCAN MATERIALS COMPANY | ||
|---|---|---|
| Date: February 16, 2021 | By: | /s/ Denson N. Franklin III |
| Name: | Denson N. Franklin III | |
| Title: | Senior Vice President, General Counsel and Secretary |
Exhibit 99.1
February 16, 2021
FOR IMMEDIATE RELEASE
Investor Contact: Mark Warren (205) 298-3220
Media Contact: Janet Kavinoky (205) 298-3220
VULCAN REPORTS FOURTH QUARTER AND FULLYEAR RESULTS
Strong Full-Year Results Reflect Improvementsin Aggregates Unit Profitability
Solid Earnings Growth Expected in2021
Birmingham, Alabama – February 16, 2021 – Vulcan Materials Company (NYSE: VMC), the nation’s largest producer of construction aggregates, today announced results for the quarter ended December 31, 2020.
Tom Hill, Chairman and Chief Executive Officer, said, “Our best-in-class aggregates business, along with the efforts and dedication of our employees, allowed us to overcome COVID-19 related disruptions in 2020. Most impressive, we delivered year-over-year gains in aggregates unit profitability throughout each quarter in 2020. Our ability to leverage Vulcan’s four strategic disciplines enabled us to expand unit margins, deliver improved cash flows, and increase returns on invested capital. Our team’s hard work along with Vulcan’s leading market positions and strong financial footing will enable us to capitalize on an improving demand outlook in 2021.”
Net earnings were $115 million in the fourth quarter, and Adjusted EBITDA was $311 million. Fourth quarter Adjusted EBITDA increased 4 percent despite a 1 percent decline in total revenues. Effective cost management throughout the organization and aggregates price growth helped drive margin expansion.
Full year revenues were $4.86 billion, 1 percent lower than the prior year, while gross profit margins expanded across each segment driving an improvement of 150 basis points in the Company’s EBITDA margin. Net earnings were $584 million, and Adjusted EBITDA was a record $1.324 billion.
Mr. Hill continued, “Construction employment gains in key markets are a positive signal that activity levels are recovering across our footprint, as compelling fundamentals in residential construction support growing demand in 2021. Shipments into private nonresidential continue to benefit from growth in heavy industrial projects such as data centers and warehouses, while construction starts in other categories remain below the prior year. Recent improvements in highway lettings and contract awards indicate growing confidence and visibility fueling advancement of planned projects, particularly in the second half of 2021. The pricing environment remains positive, and we continue to execute at a high level, positioning us well for 2021. We expect our 2021 Adjusted EBITDA will range between $1.340 billion to $1.440 billion.”
Page 2
February 16, 2021
FOR IMMEDIATE RELEASE
Highlights as of December 31, 2020 include:
| Fourth Quarter | Full Year | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Amounts in millions, except per unit data | 2020 | 2019 | 2020 | 2019 | ||||||||
| Total revenues | $ | 1,175.1 | $ | 1,186.2 | $ | 4,856.8 | $ | 4,929.1 | ||||
| Gross profit | $ | 302.7 | $ | 293.1 | $ | 1,281.5 | $ | 1,255.9 | ||||
| Aggregates segment | ||||||||||||
| Segment sales | $ | 956.5 | $ | 960.2 | $ | 3,944.3 | $ | 3,990.3 | ||||
| Freight-adjusted revenues | $ | 737.3 | $ | 720.6 | $ | 3,007.6 | $ | 3,014.2 | ||||
| Gross profit | $ | 276.0 | $ | 274.5 | $ | 1,159.2 | $ | 1,146.6 | ||||
| Shipments (tons) | 51.1 | 51.6 | 208.3 | 215.5 | ||||||||
| Freight-adjusted sales price per ton | $ | 14.42 | $ | 13.96 | $ | 14.44 | $ | 13.99 | ||||
| Gross profit per ton | $ | 5.40 | $ | 5.32 | $ | 5.57 | $ | 5.32 | ||||
| Asphalt, Concrete & Calcium segment gross profit | $ | 26.7 | $ | 18.6 | $ | 122.3 | $ | 109.3 | ||||
| Selling, Administrative and General (SAG) | $ | 98.6 | $ | 95.8 | $ | 359.8 | $ | 370.5 | ||||
| SAG as % of Total revenues | 8.4 | % | 8.1 | % | 7.4 | % | 7.5 | % | ||||
| Earnings from continuing operations before income taxes | $ | 141.2 | $ | 166.0 | $ | 743.8 | $ | 757.7 | ||||
| Net earnings | $ | 114.5 | $ | 141.1 | $ | 584.5 | $ | 617.7 | ||||
| Adjusted EBIT | $ | 210.3 | $ | 202.8 | $ | 926.7 | $ | 895.4 | ||||
| Adjusted EBITDA | $ | 311.2 | $ | 298.5 | $ | 1,323.5 | $ | 1,270.0 | ||||
| Earnings from continuing operations per diluted share | $ | 0.87 | $ | 1.07 | $ | 4.41 | $ | 4.67 | ||||
| Adjusted earnings from continuing operations per diluted share | $ | 1.07 | $ | 1.08 | $ | 4.68 | $ | 4.70 |
Reported earnings from continuing operations for the year were $588 million, or $4.41 per diluted share. Comparing adjusted earnings from continuing operations of $4.68 per diluted share in 2020 to $4.70 per diluted share in 2019, the prior year benefited from a lower tax rate due to certain tax benefits and credits that were higher than in 2020. The effect of the resulting higher tax rate in 2020 was $0.18 per diluted share.
Segment Results
Aggregates
Fourth quarter gross profit increased to $276 million due to growth in pricing and effective cost control, despite a 1 percent decline in shipments. Gains in unit profitability were widespread and marked the fourth consecutive quarter of growth in gross profit per ton. For the full year, gross profit per ton increased 5 percent, despite 3 percent lower volumes. This growth marks the tenth consecutive quarter of year-over-year improvement in the Company’s trailing-twelve-month unit profitability.
The pricing environment continues to be positive across the Company’s footprint. On a mix-adjusted basis, all of the Company’s markets reported full year price growth. For the year, mix-adjusted pricing increased 3.1 percent (reported freight-adjusted sales price increased 3.2 percent) despite a 3 percent decline in shipments. For the quarter, mix-adjusted sales price increased 1.8 percent, and reported freight-adjusted pricing increased 3.3 percent.
Fourth quarter operating efficiencies and lower diesel fuel costs helped to mitigate increased spending to remove overburden ahead of future shipments and the timing of repair costs. The Aggregates segment earnings impact from lower diesel fuel cost was $8 million in the quarter. For the full year, freight-adjusted unit cost of sales increased 2 percent and 1 percent on a cash basis. Flexible operating plans, disciplined cost control, and lower diesel fuel costs mitigated the impact of operational disruptions caused by the pandemic during the year.
Page 3
February 16, 2021
FOR IMMEDIATE RELEASE
Asphalt, Concrete and Calcium
Fourth quarter gross profit increased sharply in each segment. Asphalt segment gross profit increased 53 percent to $17 million in the fourth quarter. The year-over-year improvement was driven by higher material margins (sales price less unit cost of raw materials). Segment earnings benefited from price discipline and effective cost containment, including lower liquid asphalt costs. Shipments in the current year’s quarter were lower than the prior year, as prior year shipments included certain large projects in the Arizona and Tennessee markets.
Fourth quarter concrete segment gross profit increased 28 percent to $9 million as a result of higher material margins. Shipments decreased 12 percent versus the prior year, and average selling prices increased 2 percent compared to the prior year. Fourth quarter shipments were impacted by the lingering effects of cement supply shortages in Northern California.
Calcium segment gross profit was $1.2 million versus $0.8 million in the prior year quarter.
Full year segment earnings increased 12 percent collectively, driven by strong year-over-year improvement in asphalt. Each segment reported year-over-year margin expansion on lower revenues.
Selling, Administrative and General (SAG) and Other NonoperatingExpense
SAG expense was $99 million in the quarter and $360 million for the full year. As a percentage of total revenues, SAG expense was 7.4 percent in 2020. The Company remains focused on further leveraging its overhead cost structure.
Other nonoperating expense was $21 million, compared to income of $3 million in the prior year quarter. This year-over-year change resulted from a non-cash pension settlement charge of $23 million, or $0.13 per diluted share, recorded in the fourth quarter in connection with a voluntary lump sum distribution of benefits to certain fully vested plan participants. This action will benefit future expense and funding requirements.
Financial Position, Liquidity and Capital Allocation
Capital expenditures in the fourth quarter were $132 million and $361 million for the full year, most of which was directed toward core operating and maintenance projects. During the fourth quarter, the Company restarted planned growth projects that were put on hold in March 2020 as a result of the pandemic. In 2021, the Company expects to spend between $450 and $475 million on capital expenditures, including growth projects. The Company will continue to review its plans and will adjust as needed, while being thoughtful about preserving liquidity.
Page 4
February 16, 2021
FOR IMMEDIATE RELEASE
In 2020, the Company returned $180 million to shareholders through dividends, a 10 percent increase versus the prior year. For the year, the Company repurchased $26 million in common stock.
At year end, total debt to trailing-twelve month Adjusted EBITDA was 2.5 times or 1.6 times on a net debt basis reflecting $1.2 billion of cash on hand. Approximately $500 million will be used to pay off certain debt maturities due in March 2021. The Company’s weighted-average debt maturity was 13 years, and the effective weighted-average interest rate was 4.1 percent.
Return on invested capital increased 40 basis points from the prior year to 14.3 percent. Operating cash flows were $1.1 billion, up 9 percent versus the previous year. Solid operating earnings growth coupled with disciplined capital management led to these results.
Outlook
Regarding the Company’s outlook, Mr. Hill stated, “We are encouraged by the continued strength in residential construction activity, particularly single-family housing. Our expectation is also supported by the recent improvement in highway awards and construction employment trends in key markets. Data centers, distribution centers, and warehouses, which now comprise the largest share of new private nonresidential project awards, will continue to underpin demand in this end market. We believe these leading indicators, along with sustaining a positive pricing environment, can be a catalyst for further recovery in construction activity during 2021.”
Management expectations for 2021 include:
| · | Aggregates shipments down 2 percent to up 2 percent versus 2020 |
|---|---|
| · | Year-over-year aggregates freight-adjusted price increase of 2 to<br>4 percent |
| --- | --- |
| · | Asphalt, Concrete and Calcium gross profit up mid-to-high single digits |
| --- | --- |
| · | SAG expenses of $365 to $375 million |
| --- | --- |
| · | Interest expense of approximately $130 million |
| --- | --- |
| · | Depreciation, depletion, accretion and amortization expense of approximately<br>$400 million |
| --- | --- |
| · | An effective tax rate of approximately 21 percent |
| --- | --- |
| · | Earnings from continuing operations of $4.80 to $5.40 per diluted<br>share |
| --- | --- |
| · | Adjusted EBITDA of $1.340 to $1.440 billion |
| --- | --- |
| · | No major changes in COVID shelter-in-place restrictions |
| --- | --- |
Mr. Hill concluded, “As we saw in 2020, demand for our products can be subject to market fluctuations outside of our control. That said, we remained focused on the factors within our control, including our pricing and cost actions, both of which contributed to further improvement in our industry-leading unit margins in 2020. We will carry that determination through 2021 and beyond. Our operating plans are underpinned by our four strategic disciplines (Commercial and Operational Excellence, Logistics Innovation and Strategic Sourcing), a healthy balance sheet, strong liquidity, and the engagement of our people.”
Page 5
February 16, 2021
FOR IMMEDIATE RELEASE
Conference Call
Vulcan will host a conference call at 10:00 a.m. CT on February 16, 2021. A webcast will be available via the Company’s website at www.vulcanmaterials.com. Investors and other interested parties may access the teleconference live by calling 833-962-1439, or 832-900-4623 if outside the U.S., approximately 10 minutes before the scheduled start. The conference ID is 5378297. The conference call will be recorded and available for replay at the Company’s website approximately two hours after the call.
About Vulcan Materials Company
Vulcan Materials Company, a member of the S&P 500 Index with headquarters in Birmingham, Alabama, is the nation's largest producer of construction aggregates – primarily crushed stone, sand and gravel – and a major producer of aggregates-based construction materials, including asphalt and ready-mixed concrete. For additional information about Vulcan, go to www.vulcanmaterials.com.
FORWARD-LOOKING STATEMENT DISCLAIMER
This document contains forward-looking statements. Statements that are not historical fact, including statements about Vulcan's beliefs and expectations, are forward-looking statements. Generally, these statements relate to future financial performance, results of operations, business plans or strategies, projected or anticipated revenues, expenses, earnings (including EBITDA and other measures), dividend policy, shipment volumes, pricing, levels of capital expenditures, intended cost reductions and cost savings, anticipated profit improvements and/or planned divestitures and asset sales. These forward-looking statements are sometimes identified by the use of terms and phrases such as “believe,” “should,” “would,” “expect,” “project,” “estimate,” “anticipate,” “intend,” “plan,” “will,” “can,” “may” or similar expressions elsewhere in this document. These statements are subject to numerous risks, uncertainties, and assumptions, including but not limited to general business conditions, competitive factors, pricing, energy costs, and other risks and uncertainties discussed in the reports Vulcan periodically files with the SEC.
Page 6
February 16, 2021
FOR IMMEDIATE RELEASE
Forward-looking statements are not guarantees of future performance and actual results, developments, and business decisions may vary significantly from those expressed in or implied by the forward-looking statements. The following risks related to Vulcan's business, among others, could cause actual results to differ materially from those described in the forward-looking statements: general economic and business conditions; a pandemic, epidemic or other public health emergency, such as the recent outbreak of COVID-19; Vulcan’s dependence on the construction industry, which is subject to economic cycles; the timing and amount of federal, state and local funding for infrastructure; changes in the level of spending for private residential and private nonresidential construction; changes in Vulcan’s effective tax rate; the increasing reliance on information technology infrastructure, including the risks that the infrastructure does not work as intended, experiences technical difficulties or is subjected to cyber-attacks; the impact of the state of the global economy on Vulcan’s businesses and financial condition and access to capital markets; the highly competitive nature of the construction industry; the impact of future regulatory or legislative actions, including those relating to climate change, wetlands, greenhouse gas emissions, the definition of minerals, tax policy or international trade; the outcome of pending legal proceedings; pricing of Vulcan's products; weather and other natural phenomena, including the impact of climate change and availability of water; energy costs; costs of hydrocarbon-based raw materials; healthcare costs; the amount of long-term debt and interest expense incurred by Vulcan; changes in interest rates; the impact of a discontinuation of the London Interbank Offered Rate (LIBOR); volatility in pension plan asset values and liabilities, which may require cash contributions to the pension plans; the impact of environmental cleanup costs and other liabilities relating to existing and/or divested businesses; Vulcan's ability to secure and permit aggregates reserves in strategically located areas; Vulcan's ability to manage and successfully integrate acquisitions; the effect of changes in tax laws, guidance and interpretations; significant downturn in the construction industry may result in the impairment of goodwill or long-lived assets; changes in technologies, which could disrupt the way Vulcan does business and how Vulcan’s products are distributed; and other assumptions, risks and uncertainties detailed from time to time in the reports filed by Vulcan with the SEC. All forward-looking statements in this communication are qualified in their entirety by this cautionary statement. Vulcan disclaims and does not undertake any obligation to update or revise any forward-looking statement in this document except as required by law.
Source: Vulcan Materials Company
Table A
Vulcan Materials Companyand Subsidiary Companies
| (in thousands, except per share data) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Twelve Months Ended | |||||||||||
| Consolidated Statements of Earnings | December 31 | December 31 | ||||||||||
| (Condensed and unaudited) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Total revenues | $ | 1,175,120 | $ | 1,186,152 | $ | 4,856,826 | $ | 4,929,103 | ||||
| Cost of revenues | 872,379 | 893,071 | 3,575,345 | 3,673,202 | ||||||||
| Gross profit | 302,741 | 293,081 | 1,281,481 | 1,255,901 | ||||||||
| Selling, administrative and general expenses | 98,627 | 95,801 | 359,772 | 370,548 | ||||||||
| Gain on sale of property, plant & equipment and<br> businesses | 1,681 | 12,770 | 3,997 | 23,752 | ||||||||
| Other operating expense, net | (9,366 | ) | (16,474 | ) | (29,975 | ) | (31,647 | ) | ||||
| Operating earnings | 196,429 | 193,576 | 895,731 | 877,458 | ||||||||
| Other nonoperating income (expense), net | (21,357 | ) | 3,289 | (17,540 | ) | 9,243 | ||||||
| Interest expense, net | 33,884 | 30,835 | 134,393 | 129,000 | ||||||||
| Earnings from continuing operations before income<br> taxes | 141,188 | 166,030 | 743,798 | 757,701 | ||||||||
| Income tax expense | 25,273 | 23,434 | 155,803 | 135,198 | ||||||||
| Earnings from continuing operations | 115,915 | 142,596 | 587,995 | 622,503 | ||||||||
| Loss on discontinued operations, net of tax | (1,397 | ) | (1,504 | ) | (3,515 | ) | (4,841 | ) | ||||
| Net earnings | $ | 114,518 | $ | 141,092 | $ | 584,480 | $ | 617,662 | ||||
| Basic earnings (loss) per share | ||||||||||||
| Continuing operations | $ | 0.87 | $ | 1.08 | $ | 4.44 | $ | 4.71 | ||||
| Discontinued operations | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.04 | ) |
| Net earnings | $ | 0.86 | $ | 1.07 | $ | 4.41 | $ | 4.67 | ||||
| Diluted earnings (loss) per share | ||||||||||||
| Continuing operations | $ | 0.87 | $ | 1.07 | $ | 4.41 | $ | 4.67 | ||||
| Discontinued operations | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.04 | ) |
| Net earnings | $ | 0.86 | $ | 1.06 | $ | 4.39 | $ | 4.63 | ||||
| Weighted-average common shares outstanding | ||||||||||||
| Basic | 132,619 | 132,467 | 132,578 | 132,300 | ||||||||
| Assuming dilution | 133,367 | 133,467 | 133,245 | 133,385 | ||||||||
| Depreciation, depletion, accretion and amortization | $ | 100,894 | $ | 95,671 | $ | 396,806 | $ | 374,596 | ||||
| Effective tax rate from continuing operations | 17.9 | % | 14.1 | % | 20.9 | % | 17.8 | % |
Table B
Vulcan Materials Company
and Subsidiary Companies
| (in thousands) | |||||
|---|---|---|---|---|---|
| Consolidated Balance Sheets | December 31 | ||||
| (Condensed and unaudited) | 2019 | ||||
| Assets | |||||
| Cash and cash equivalents | 1,197,068 | $ | 271,589 | ||
| Restricted cash | 945 | 2,917 | |||
| Accounts and notes receivable | |||||
| Accounts and notes receivable, gross | 558,848 | 573,241 | |||
| Allowance for doubtful accounts | (2,551 | ) | (3,125 | ) | |
| Accounts and notes receivable, net | 556,297 | 570,116 | |||
| Inventories | |||||
| Finished products | 378,389 | 391,666 | |||
| Raw materials | 33,780 | 31,318 | |||
| Products in process | 4,555 | 5,604 | |||
| Operating supplies and other | 31,861 | 29,720 | |||
| Inventories | 448,585 | 458,308 | |||
| Other current assets | 74,270 | 76,396 | |||
| Total current assets | 2,277,165 | 1,379,326 | |||
| Investments and long-term receivables | 34,301 | 60,709 | |||
| Property, plant & equipment | |||||
| Property, plant & equipment, cost | 9,102,086 | 8,749,217 | |||
| Allowances for depreciation, depletion & amortization | (4,676,087 | ) | (4,433,179 | ) | |
| Property, plant & equipment, net | 4,425,999 | 4,316,038 | |||
| Operating lease right-of-use assets, net | 423,128 | 408,189 | |||
| Goodwill | 3,172,112 | 3,167,061 | |||
| Other intangible assets, net | 1,123,544 | 1,091,475 | |||
| Other noncurrent assets | 230,656 | 225,995 | |||
| Total assets | 11,686,905 | $ | 10,648,793 | ||
| Liabilities | |||||
| Current maturities of long-term debt | 515,435 | 25 | |||
| Trade payables and accruals | 273,080 | 265,159 | |||
| Other current liabilities | 259,368 | 270,379 | |||
| Total current liabilities | 1,047,883 | 535,563 | |||
| Long-term debt | 2,772,240 | 2,784,315 | |||
| Deferred income taxes, net | 706,050 | 633,039 | |||
| Deferred revenue | 174,045 | 179,880 | |||
| Operating lease liabilities | 399,582 | 388,042 | |||
| Other noncurrent liabilities | 559,775 | 506,097 | |||
| Total liabilities | 5,659,575 | $ | 5,026,936 | ||
| Equity | |||||
| Common stock, 1 par value | 132,516 | 132,371 | |||
| Capital in excess of par value | 2,802,012 | 2,791,353 | |||
| Retained earnings | 3,274,107 | 2,895,871 | |||
| Accumulated other comprehensive loss | (181,305 | ) | (197,738 | ) | |
| Total equity | 6,027,330 | $ | 5,621,857 | ||
| Total liabilities and equity | 11,686,905 | $ | 10,648,793 |
All values are in US Dollars.
Table C
VulcanMaterials Company
andSubsidiary Companies
| (in thousands) | ||||||
|---|---|---|---|---|---|---|
| Twelve Months Ended | ||||||
| Consolidated Statements of Cash Flows | December 31 | |||||
| (Condensed and unaudited) | 2020 | 2019 | ||||
| Operating Activities | ||||||
| Net earnings | $ | 584,480 | $ | 617,662 | ||
| Adjustments to reconcile net earnings to net cash provided by operating activities | ||||||
| Depreciation, depletion, accretion and amortization | 396,806 | 374,596 | ||||
| Noncash operating lease expense | 38,272 | 35,344 | ||||
| Net gain on sale of property, plant & equipment and businesses | (3,997 | ) | (23,752 | ) | ||
| Contributions to pension plans | (8,819 | ) | (8,882 | ) | ||
| Share-based compensation expense | 32,991 | 31,843 | ||||
| Deferred tax expense | 62,018 | 76,011 | ||||
| Changes in assets and liabilities<br> before initial effects of business acquisitions and dispositions | (39,710 | ) | (147,218 | ) | ||
| Other, net | 8,318 | 28,518 | ||||
| Net cash provided by operating activities | $ | 1,070,359 | $ | 984,122 | ||
| Investing Activities | ||||||
| Purchases of property, plant & equipment | (362,194 | ) | (384,094 | ) | ||
| Proceeds from sale of property, plant & equipment | 11,461 | 22,661 | ||||
| Proceeds from sale of businesses | 968 | 1,744 | ||||
| Payment for businesses acquired, net of acquired cash | (43,223 | ) | (44,151 | ) | ||
| Other, net | 11,474 | (11,997 | ) | |||
| Net cash used for investing activities | $ | (381,514 | ) | $ | (415,837 | ) |
| Financing Activities | ||||||
| Proceeds from short-term debt | 0 | 366,900 | ||||
| Payment of short-term debt | 0 | (499,900 | ) | |||
| Payment of current maturities and long-term debt | (250,025 | ) | (23 | ) | ||
| Proceeds from issuance of long-term debt | 750,000 | 0 | ||||
| Debt issuance and exchange costs | (15,394 | ) | 0 | |||
| Settlements of interest rate derivatives | (19,863 | ) | 0 | |||
| Purchases of common stock | (26,132 | ) | (2,602 | ) | ||
| Dividends paid | (180,216 | ) | (163,973 | ) | ||
| Share-based compensation, shares withheld for taxes | (22,144 | ) | (38,522 | ) | ||
| Other, net | (1,564 | ) | (63 | ) | ||
| Net cash provided by (used for) financing activities | $ | 234,662 | $ | (338,183 | ) | |
| Net increase in cash and cash equivalents and restricted cash | 923,507 | 230,102 | ||||
| Cash and cash equivalents and restricted cash at beginning of year | 274,506 | 44,404 | ||||
| Cash and cash equivalents and restricted cash at end of year | $ | 1,198,013 | $ | 274,506 |
Table D
Segment Financial Data and Unit Shipments
| (in<br> thousands, except per unit data) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three<br> Months Ended | Twelve<br> Months Ended | ||||||||||||
| December<br> 31 | December<br> 31 | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Total Revenues | |||||||||||||
| Aggregates<br> ^1^ | $ | 956,502 | $ | 960,164 | $ | 3,944,286 | $ | 3,990,275 | |||||
| Asphalt<br> ^2^ | 194,665 | 206,331 | 792,605 | 855,821 | |||||||||
| Concrete | 85,362 | 95,258 | 383,617 | 395,627 | |||||||||
| Calcium | 2,451 | 2,118 | 7,720 | 8,191 | |||||||||
| Segment sales | $ | 1,238,980 | $ | 1,263,871 | $ | 5,128,228 | $ | 5,249,914 | |||||
| Aggregates intersegment sales | (63,860 | ) | (77,719 | ) | (271,402 | ) | (320,811 | ) | |||||
| Total revenues | $ | 1,175,120 | $ | 1,186,152 | $ | 4,856,826 | $ | 4,929,103 | |||||
| Gross Profit | |||||||||||||
| Aggregates | $ | 275,994 | $ | 274,516 | $ | 1,159,178 | $ | 1,146,649 | |||||
| Asphalt | 16,987 | 11,073 | 75,233 | 63,023 | |||||||||
| Concrete | 8,562 | 6,664 | 44,159 | 43,151 | |||||||||
| Calcium | 1,198 | 828 | 2,911 | 3,078 | |||||||||
| Total | $ | 302,741 | $ | 293,081 | $ | 1,281,481 | $ | 1,255,901 | |||||
| Depreciation, Depletion, Accretion<br> and Amortization | |||||||||||||
| Aggregates | $ | 80,757 | $ | 77,787 | $ | 321,127 | $ | 305,046 | |||||
| Asphalt | 8,910 | 8,856 | 34,956 | 35,199 | |||||||||
| Concrete | 3,940 | 3,958 | 16,010 | 13,620 | |||||||||
| Calcium | 43 | 55 | 189 | 232 | |||||||||
| Other | 7,244 | 5,015 | 24,524 | 20,499 | |||||||||
| Total | $ | 100,894 | $ | 95,671 | $ | 396,806 | $ | 374,596 | |||||
| Average Unit Sales Price and<br> Unit Shipments | |||||||||||||
| Aggregates | |||||||||||||
| Freight-adjusted<br> revenues ^3^ | $ | 737,313 | $ | 720,584 | $ | 3,007,634 | $ | 3,014,157 | |||||
| Aggregates - tons | 51,132 | 51,620 | 208,295 | 215,465 | |||||||||
| Freight-adjusted<br> sales price ^4^ | $ | 14.42 | $ | 13.96 | $ | 14.44 | $ | 13.99 | |||||
| Other Products | |||||||||||||
| Asphalt Mix - tons | 2,882 | 3,041 | 11,835 | 12,665 | |||||||||
| Asphalt Mix - sales price | $ | 57.70 | $ | 57.87 | $ | 57.97 | $ | 57.79 | |||||
| Ready-mixed concrete - cubic yards | 656 | 744 | 2,951 | 3,104 | |||||||||
| Ready-mixed concrete - sales price | $ | 128.93 | $ | 126.97 | $ | 128.93 | $ | 126.38 | |||||
| Calcium - tons | 88 | 78 | 282 | 294 | |||||||||
| Calcium - sales price | $ | 27.64 | $ | 27.30 | $ | 27.32 | $ | 27.85 | |||||
| ^1^ | Includes<br>product sales (crushed stone, sand and gravel, sand, and other aggregates), as well as freight & delivery costs that<br>we pass along to our customers, and service revenues related to aggregates. | ||||||||||||
| --- | --- | ||||||||||||
| ^2^ | Includes<br>product sales, as well as service revenues from our asphalt construction paving business. | ||||||||||||
| --- | --- | ||||||||||||
| ^3^ | Freight-adjusted<br>revenues are Aggregates segment sales excluding freight & delivery revenues and immaterial other revenues related to<br>services, such as landfill tipping fees, that are derived from our aggregates business. | ||||||||||||
| --- | --- | ||||||||||||
| ^4^ | Freight-adjusted<br>sales price is calculated as freight-adjusted revenues divided by aggregates unit shipments. | ||||||||||||
| --- | --- | ||||||||||||
| Appendix 1 | |||||||||||||
| --- | |||||||||||||
| 1. | Reconciliation of Non-GAAP Measures | ||||||||||||
| --- | --- |
Aggregates segment freight-adjusted revenues is not a Generally Accepted Accounting Principle (GAAP) measure. We present this metric as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. It also excludes immaterial other revenues related to services, such as landfill tipping fees, that are derived from our aggregates business. Additionally, we use this metric as the basis for calculating the average sales price of our aggregates products. Reconciliation of this metric to its nearest GAAP measure is presented below:
Aggregates Segment Freight-Adjusted Revenues
| (in thousands, except per ton data) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Twelve Months Ended | ||||||||
| December 31 | December 31 | ||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||
| Aggregates segment | |||||||||
| Segment sales | $ | 956,502 | $ | 960,164 | $ | 3,944,286 | $ | 3,990,275 | |
| Less: Freight & delivery revenues ^1^ | 205,034 | 225,139 | 877,003 | 921,064 | |||||
| Other revenues | 14,155 | 14,441 | 59,649 | 55,054 | |||||
| Freight-adjusted revenues | $ | 737,313 | $ | 720,584 | $ | 3,007,634 | $ | 3,014,157 | |
| Unit shipment - tons | 51,132 | 51,620 | 208,295 | 215,465 | |||||
| Freight-adjusted sales price | $ | 14.42 | $ | 13.96 | $ | 14.44 | $ | 13.99 | |
| ^1^ | At<br>the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated<br>level) and freight to remote distribution sites. | ||||||||
| --- | --- |
Aggregates segment incremental gross profit flow-through rate is not a GAAP measure and represents the year-over-year change in gross profit divided by the year-over-year change in segment sales excluding freight & delivery (revenues and costs). We present this metric as it is consistent with the basis by which we review our operating results. We believe that this presentation is consistent with our competitors and meaningful to our investors as it excludes revenues associated with freight & delivery, which are pass-through activities. Reconciliation of this metric to its nearest GAAP measure is presented below:
Aggregates Segment Incremental Gross Profit Margin in Accordance with GAAP
| (dollars<br> in thousands) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three<br> Months Ended | Twelve<br> Months Ended | ||||||||||||
| December<br> 31 | December<br> 31 | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Aggregates segment | |||||||||||||
| Gross profit | $ | 275,994 | $ | 274,516 | $ | 1,159,178 | $ | 1,146,649 | |||||
| Segment sales | $ | 956,502 | $ | 960,164 | $ | 3,944,286 | $ | 3,990,275 | |||||
| Gross profit margin | 28.9 | % | 28.6 | % | 29.4 | % | 28.7 | % | |||||
| Incremental gross profit<br> margin | N/A | N/A |
Aggregates Segment Incremental Gross Profit Flow-through Rate (Non-GAAP)
| (dollars<br> in thousands) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three<br> Months Ended | Twelve<br> Months Ended | |||||||||||
| December<br> 31 | December<br> 31 | |||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Aggregates segment | ||||||||||||
| Gross profit | $ | 275,994 | $ | 274,516 | $ | 1,159,178 | $ | 1,146,649 | ||||
| Segment sales | $ | 956,502 | $ | 960,164 | $ | 3,944,286 | $ | 3,990,275 | ||||
| Less: Freight & delivery<br> revenues ^1^ | 205,034 | 225,139 | 877,003 | 921,064 | ||||||||
| Segment<br> sales excluding freight & delivery | $ | 751,468 | $ | 735,025 | $ | 3,067,283 | $ | 3,069,211 | ||||
| Gross profit margin excluding<br> freight & delivery | 36.7 | % | 37.3 | % | 37.8 | % | 37.4 | % | ||||
| Incremental gross profit<br> flow-through rate | 9.0 | % | N/A | |||||||||
| ^1^ | At<br>the segment level, freight & delivery revenues include intersegment freight & delivery (which are eliminated at the consolidated<br>level) and freight to remote distribution sites. | |||||||||||
| --- | --- |
GAAP does not define "Aggregates segment cash gross profit" and it should not be considered as an alternative to earnings measures defined by GAAP. We and the investment community use this metric to assess the operating performance of our business. Additionally, we present this metric as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. Aggregates segment cash gross profit per ton is computed by dividing Aggregates segment cash gross profit by tons shipped. Reconciliation of this metric to its nearest GAAP measure is presented below:
Aggregates Segment Cash Gross Profit
| (in<br> thousands, except per ton data) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Three<br> Months Ended | Twelve<br> Months Ended | ||||||||
| December<br> 31 | December<br> 31 | ||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||
| Aggregates segment | |||||||||
| Gross profit | $ | 275,994 | $ | 274,516 | $ | 1,159,178 | $ | 1,146,649 | |
| Depreciation, depletion,<br> accretion and amortization | 80,757 | 77,787 | 321,127 | 305,046 | |||||
| Aggregates<br> segment cash gross profit | $ | 356,751 | $ | 352,303 | $ | 1,480,305 | $ | 1,451,695 | |
| Unit shipments - tons | 51,132 | 51,620 | 208,295 | 215,465 | |||||
| Aggregates segment cash gross<br> profit per ton | $ | 6.98 | $ | 6.82 | $ | 7.11 | $ | 6.74 | |
| Appendix 2 | |||||||||
| --- |
Reconciliation of Non-GAAP Measures (Continued)
GAAP does not define "Earnings Before Interest, Taxes, Depreciation and Amortization" (EBITDA) and it should not be considered as an alternative to earnings measures defined by GAAP. We use this metric to assess the operating performance of our business and as a basis for strategic planning and forecasting as we believe that it closely correlates to long-term shareholder value. We do not use this metric as a measure to allocate resources. We adjust EBITDA for certain items to provide a more consistent comparison of earnings performance from period to period. Reconciliation of this metric to its nearest GAAP measure is presented below:
EBITDA and Adjusted EBITDA
| (in thousands) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended | Twelve Months Ended | ||||||||||||
| December 31 | December 31 | ||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||
| Net earnings | $ | 114,518 | $ | 141,092 | $ | 584,480 | $ | 617,662 | |||||
| Income tax expense | 25,273 | 23,434 | 155,803 | 135,198 | |||||||||
| Interest expense, net | 33,884 | 30,835 | 134,393 | 129,000 | |||||||||
| Loss on discontinued operations, net of tax | 1,397 | 1,504 | 3,515 | 4,841 | |||||||||
| EBIT | $ | 175,072 | $ | 196,865 | $ | 878,191 | $ | 886,701 | |||||
| Depreciation, depletion, accretion and amortization | 100,894 | 95,671 | 396,806 | 374,596 | |||||||||
| EBITDA | $ | 275,966 | $ | 292,536 | $ | 1,274,997 | $ | 1,261,297 | |||||
| Gain on sale of businesses | 0 | (9,289 | ) | 0 | (13,353 | ) | |||||||
| Property donation | 0 | 10,847 | 0 | 10,847 | |||||||||
| Charges associated with divested operations | 269 | 3,033 | 6,935 | 3,033 | |||||||||
| Business development ^1^ | 9,447 | 1,345 | 7,334 | 1,748 | |||||||||
| COVID-19 direct incremental costs | 2,781 | 0 | 10,170 | 0 | |||||||||
| Pension settlement charge | 22,740 | 0 | 22,740 | 0 | |||||||||
| Restructuring charges | 0 | 0 | 1,333 | 6,457 | |||||||||
| Adjusted EBITDA | $ | 311,203 | $ | 298,472 | $ | 1,323,509 | $ | 1,270,029 | |||||
| Depreciation, depletion, accretion and amortization | (100,894 | ) | (95,671 | ) | (396,806 | ) | (374,596 | ) | |||||
| Adjusted EBIT | $ | 210,309 | $ | 202,801 | $ | 926,703 | $ | 895,433 | |||||
| Adjusted EBITDA margin | 26.5 | % | 25.2 | % | 27.3 | % | 25.8 | % | |||||
| ^1^ | Represents<br>non-routine charges or gains associated with acquisitions including the cost impact of purchase accounting inventory valuations. | ||||||||||||
| --- | --- |
Similar to our presentation of Adjusted EBITDA, we present Adjusted Diluted earnings per share (EPS) from continuing operations to provide a more consistent comparison of earnings performance from period to period. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below:
Adjusted Diluted EPS from Continuing Operations (Adjusted Diluted EPS)
| Three<br> Months Ended | Twelve<br> Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December<br> 31 | December<br> 31 | |||||||
| 2020 | 2019 | 2020 | 2019 | |||||
| Diluted EPS from continuing operations | $ | 0.87 | $ | 1.07 | $ | 4.41 | $ | 4.67 |
| Items<br> included in Adjusted EBITDA above | 0.20 | 0.01 | 0.27 | 0.03 | ||||
| Adjusted Diluted EPS | $ | 1.07 | $ | 1.08 | $ | 4.68 | $ | 4.70 |
Net debt to Adjusted EBITDA is not a GAAP measure and should not be considered as an alternative to metrics defined by GAAP. We, the investment community and credit rating agencies use this metric to assess our leverage. Net debt subtracts cash and cash equivalents and restricted cash from total debt. Reconciliation to its nearest GAAP measure is presented below:
Net Debt to Adjusted EBITDA
| (in thousands) | ||||||
|---|---|---|---|---|---|---|
| Twelve Months Ended | ||||||
| December 31 | ||||||
| 2020 | 2019 | |||||
| Debt | ||||||
| Current maturities of long-term debt | $ | 515,435 | $ | 25 | ||
| Long-term debt | 2,772,240 | 2,784,315 | ||||
| Total debt | $ | 3,287,675 | $ | 2,784,340 | ||
| Less: Cash and cash equivalents and restricted cash | 1,198,013 | 274,506 | ||||
| Net debt | $ | 2,089,662 | $ | 2,509,834 | ||
| Adjusted EBITDA | $ | 1,323,509 | $ | 1,270,029 | ||
| Total debt to Adjusted EBITDA | 2.5 | x | 2.2 | x | ||
| Net debt to Adjusted EBITDA | 1.6 | x | 2.0 | x | ||
| Appendix 3 | ||||||
| --- |
Reconciliation of Non-GAAP Measures (Continued)
We define "Return on Invested Capital" (ROIC) as Adjusted EBITDA for the trailing-twelve months divided by average invested capital (as illustrated below) during the trailing 5-quarters. Our calculation of ROIC is considered a non-GAAP financial measure because we calculate ROIC using the non-GAAP metric EBITDA. We believe that our ROIC metric is meaningful because it helps investors assess how effectively we are deploying our assets. Although ROIC is a standard financial metric, numerous methods exist for calculating a company's ROIC. As a result, the method we use to calculate our ROIC may differ from the methods used by other companies.
| Return on Invested Capital | ||||||
|---|---|---|---|---|---|---|
| (dollars in thousands) | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| TTM | ||||||
| December<br> 31 | ||||||
| 2020 | 2019 | |||||
| Adjusted EBITDA | $ | 1,323,509 | $ | 1,270,029 | ||
| Average<br> invested capital ^1^ | ||||||
| Property, plant & equipment | $ | 4,373,987 | $ | 4,281,342 | ||
| Goodwill | 3,170,092 | 3,165,685 | ||||
| Other<br> intangible assets | 1,104,044 | 1,084,113 | ||||
| Fixed<br> and intangible assets | $ | 8,648,123 | $ | 8,531,140 | ||
| Current assets | $ | 1,845,743 | $ | 1,224,316 | ||
| Less: Cash and cash equivalents | 698,944 | 93,528 | ||||
| Less:<br> Current tax | 18,545 | 12,633 | ||||
| Adjusted current assets | 1,128,254 | 1,118,155 | ||||
| Current liabilities | 833,553 | 599,319 | ||||
| Less: Current maturities of<br> long-term debt | 304,989 | 24 | ||||
| Less:<br> Short-term debt | 0 | 89,700 | ||||
| Adjusted<br> current liabilities | 528,564 | 509,595 | ||||
| Adjusted<br> net working capital | $ | 599,690 | $ | 608,560 | ||
| Average invested capital | $ | 9,247,813 | $ | 9,139,700 | ||
| Return on invested capital | 14.3 | % | 13.9 | % | ||
| ^1^ | Average<br>invested capital is based on a trailing 5-quarters. | |||||
| --- | --- |
The following reconciliation to the mid-point of the range of 2021 Projected EBITDA excludes adjustments (as noted in Adjusted EBITDA above) as they are difficult to forecast (timing or amount). Due to the difficulty in forecasting such adjustments, we are unable to estimate their significance. This metric is not defined by GAAP and should not be considered as an alternative to earnings measures defined by GAAP. Reconciliation of this metric to its nearest GAAP measure is presented below:
2021 Projected EBITDA
| (in millions) | ||
|---|---|---|
| Mid-point | ||
| Net earnings | $ | 680 |
| Income tax expense | 180 | |
| Interest expense, net | 130 | |
| Discontinued operations, net of tax | 0 | |
| Depreciation, depletion, accretion and amortization | 400 | |
| Projected EBITDA | $ | 1,390 |